This
is a glossary of terms that are, for the most part, unique
to the world of financial investigations, or terms that have
a different meaning than that which is commonly understood
when they are used in this context.

Paper Profit (Loss):
Any profit or loss on a security that is not realized because
it has not actually been sold.

Par: 1) The
face value or principal value of a bond, usually $1,000 per
bond. A bond trading at par is trading at its face value.
2) A preferred stocks' face value, usually $100 per share.
The stock's book value, liquidating value and dividend payments
are based on the par value. 3) A common stock's stated value.
It is primarily used for bookkeeping purposes and has no relationship
to its market value.

Partial Delivery:
Term used when a seller does not deliver the full amount of
shares sold. Partial delivery would occur, for example, if
500 shares were sold and the seller only delivers 400.

Payment Date:
Date on which declared stock dividend or bond interest is
paid to holders of record.

Payout Ratio:
The percentage of a corporation's earnings that are paid to
shareholders as dividends. For example, a corporation that
pays a $.12 dividend out of every $1.00 of earnings has a
payout ratio of 12%.

P/E Ratio: The
relationship between a stock's price and its earnings per
share. It is calculated by dividing the stock's price per
share by earnings per share for a twelve month period. For
instance, a stock selling for $25 a share and earning $5 a
share is said to be selling at a P/E ratio of 5. The ratio,
also known as the "multiple", gives an investor
an approximation of how much they are paying for a corporation's
earning power. Low P/E stocks are usually in mature industries.
They may be blue chip or out of favor companies. In either
case, their growth potential is limited. Companies with high
P/E ratios (over 20) are usually up-and-comers that are fast
growing. These companies are riskier investments.

Penny Stock: A
low priced stock that is traded in the over-the-counter market.
Although a stock is categorized as a “penny” stock
if it sells for less than $5 a share, they typically sells
for less than $1a share. Penny stocks are very volatile and
speculative.

Pension Fund:
A fund that is set up to pay pension benefits to retired employees
of a corporation, government entity, or to other organizations.
The fund's earnings are tax deferred until withdrawn by the
retiree, who is then responsible for paying taxes on the amount
withdrawn.

Performance Fund:
A mutual fund whose goal is to achieve maximum growth of capital--sometimes
called "aggressive growth funds". The fund invests
in companies that are in high growth cycles. Such companies
typically do not pay dividends as its earnings are plowed
back into the firm for expansion. Although these funds have
a higher risk than a growth or balance fund, it is not considered
to be speculative.

Perpetual Warrant:
A warrant that gives the holder the right to buy a fixed number
of common shares of stock at a fixed price. It does not have
an expiration date.

PFD (Preferred Stock):
An abbreviation that is commonly used on order tickets to
indicate a preferred stock. A preferred stock is a type of
capital stock that pays dividends at a set rate (at the time
of issuance). Dividend payments to preferred holders must
be made before common stock dividends can be paid. Preferred
stocks usually do not have voting rights.

Pink Sheets:
A National Quotations Bureau daily publication that lists
market maker's bid and asked prices from the prior day for
over-the-counter securities. Equity securities are printed
on long pink paper, hence the name. Debt securities are printed
on long yellow sheets, hence their name, yellow sheets.

P&L (Profit And Loss
Statement): A summary of a corporation's revenues,
costs, and expenses within an accounting period--also called
an "Income Statement".

PLC: A UK public
limited company
Pledge: The transfer of property, such as securities, to a
creditor (or lender) as collateral for an obligation--such
as securities bought on margin or a bank loan. "Assign"
differs from pledge (or hypothecate) as an assignment involves
a transfer of title, whereas pledging does not.

Plus: 1) A sign
used to indicate that a transaction for a particular security
was at a higher price than the previous transaction. 2) A
fractional variation used to indicate a Treasury note or bond
that is being quoted in 64ths. For instance, 93.16+ means
93 and 33/64th of par. The numerator is 2 times 16 plus 1;
64 is the denominator. 3) In newspaper stock listings, a +
in the change column means that the closing price of a security
is higher than the previous day's close by the amount in the
column.

Plus Tick: Security
transaction executed at a price higher than the preceding
transaction in the same security--also called an "uptick".
For each security in which its last price is higher than the
preceding transaction, a plus sign is displayed next to its
price at the trading post on the floor of the NYSE. Short
sales can only be executed on upticks or zero plus ticks.

PMV (Private Market Value):
The aggregate value of a corporation if it is broken into
individual operations and each piece is given its own stock
price--also called "breakup value" or "takeover
value". Analysts look for corporations with high PMV
relative to its current market value to identify potential
takeover targets and bargains. It differs from the corporation's
liquidating value because it does not include going-concern
value.

POA (Power Of Attorney):
Written document that permits a third party to do transactions
on the behalf of the person signing the document. Depending
on the specifications within the document, a power of attorney
may be full or limited.

Point: 1) In
stocks, a point equals $1. If ABC shares rise 1 1/4 points,
each share has risen $1.25. 2) In bonds, a point equals $10
since a bond is quoted as a percentage of $1,000. A bond that
rises 2 1/2 points gains 2.5% of 1,000, or $25. Thus, a bond
that advances from 89 to 91 1/2 means a gain in dollar value
from $890 to $915. 3) In market averages, the point is a unit
of movement in an average. It is not equivalent to any dollar
value. For example, if the Dow-Jones Industrial average rises
from 4236 to 4258.5, it has risen 22.5 points.

PORTAL: The
NASD's trading system for secondary trading of unregistered
securities in transactions exempt from the registration and
a prospectus delivery requirement of the Securities Act of
1933 pursuant to SEC Rule 144A.

Portfolio: The
holdings of more than one stock, bond, cash equivalent or
other asset by an individual or institution. A portfolio may
be designed to achieve the investors goals--such as obtaining
maximum returns or reducing risk through diversification.

Position Building:
The accumulation of a long or short position in such a manner
as to not push the security's price up or down. This method
of slowly building a large position is used by institutional
investors.

Positive Yield Curve:
On debt securities of similar quality, a condition in which
the yields on long term securities are higher than the yields
on short term securities. Typically, short term interest rates
are lower than long term rates--those who invest their money
for longer periods are taking more risk.

Post: A structure
shaped like a horseshoe that is located on the floor of the
NYSE. Specific securities are traded at each post. Monitors
surrounding the post display quotations for the securities
traded at that particular post.

Power Of Attorney (POA):
Written document that permits a third party to do transactions
on the behalf of the person signing the document. Depending
on the specifications within the document, a power of attorney
may be full or limited.

Preemptive Right:
A right given to shareholders that allows them to purchase
shares of a new issue before it is offered to non-shareholders.
This allows shareholders to retain the same percentage of
ownership in a corporation.

Preferential transfer: A
disposition of an asset that is unfair to other creditors
of the transferor.

Preferred Stock: A preferred
stock is a type of capital stock that pays dividends at a
set rate (at the time of issuance). Dividend payments to preferred
holders must be made before common stock dividends can be
paid. Preferred stocks usually do not have voting rights.

Pre-filing notice: Mailed
by the IRS to parties (tax payers) who are believed to be
participating in fraudulent trust programs. The notice requests
that the receiver seek professional counsel before filing
their next tax return.

Preliminary Prospectus: A
preliminary prospectus is given to investors when brokers
obtain indications of interest. Although the document does
not have all the information included in the offering circular,
it does include the major facts. A preliminary prospectus
is often called a "red herring" because its front-page
notice is printed in red ink. The notice states that the preliminary
prospectus is "subject to completion or amendment"
and "shall not constitute an offer to sell...".

Premium Bond: A bond that
is selling above its face value or redemption price.

Premium Income: Money received
by option writers (sellers) from option buyers in payment
for specific rights. A person who writes options to collect
premiums hopes that the market price for underlying security
remains stable. A put writer does not want the security to
fall, and a call writer does not want it to rise.

Premium Raid: An attempt
to take control of a company by offering its shareholders
an amount over the current market value of their shares.

Pretax Earnings Or Profit:
The amount of profit a corporation earns before paying its
taxes. It is calculated by subtracting all costs and expenses
(other than taxes) from total revenues.

Price Change: The difference
in a security's price at the close of a trading session as
compared to its previous session's closing price. In the case
of an average (or index), all of its components' price changes
are taken into account.

Price/Earnings Ratio (P/E):
The relationship between a stock's price and its earnings
per share. It is calculated by dividing the stock's price
per share by earnings per share for a twelve month period.
For instance, a stock selling for $25 a share and earning
$5 a share is said to be selling at a P/E ratio of 5. The
ratio, also known as the "multiple", gives an investor
an approximation of how much they are paying for a corporation's
earning power. Low P/E stocks are usually in mature industries.
They may be blue chip or out of favor companies. In either
case, their growth potential is limited. Companies with high
P/E ratios (over 20) are usually up-and-comers that are fast
growing. These companies are riskier investments.

Price Range: The high and
low price that a security traded at during a designated period.
In annual reports, a corporation will show the price range
for its fiscal year. In daily newspapers, the period is a
rolling 52 weeks.

Prime Paper: The best quality
commercial paper as rated by agencies such as Moody's Investors
Services and is investment grade. Moody's has three ratings
for prime paper--P1 (highest quality), P2 (higher quality),
and P3 (high quality).

Prime Rate: Interest rate
charged by banks to their most creditworthy and largest corporate
customers. The prime rate is used as a base rate for other
types of loans such as personal, commercial and financing.
These types of loans are normally of an interest rate a few
points above the prime rate. Additionally, as the customer's
creditworthiness declines, the interest rate will increase.

Principal: 1) The face value
or par value of a debt instrument that is separate from interest.
2) A person's capital, or the amount invested. 3) An employee
of a securities firm who has supervisory responsibilities.

Principal Amount: The face
value of a bond, or other obligation, that is required to
be paid to the holder at maturity.

Principal Stockholder: A
shareholder who owns a 10% or more voting stock in a registered
company.

Private Market Value (PMV): The
aggregate value of a corporation if it is broken into individual
operations and each has its own stock price--also called "breakup
value" or "takeover value". Analysts look for
corporations with high PMV relative to its current market
value to identify potential takeover targets and bargains.
It differs from the corporation's liquidating value because
it does not include going-concern value.

Private Purpose Bond: A municipal
bond whose interest may (or may not) be federally tax-exempt--also
called "private activity bonds". It is dependent
on the percentage of the bond's benefits that goes to private
activities. A private purpose bond for a sports arena would
not be tax-exempt, while one for an airport would. A sports
arena generally does not help the general public whereas an
airport can help the entire community.

Probate: The legal process
for the distribution of the estate of a decedent whereby a
decedent's will is proffered to a court and an executor is
appointed to handle the settlement of the will.

Proceeds: An amount received
from selling a security after commissions are deducted.

Producer Price Index: A measure
of changes in wholesale prices. The index is calculated monthly
by the US Bureau of Labor Statistics. Its components are broken
down by industry sector, commodity and processing stage.

Profit: The difference between
a security's purchase price and selling price. If the selling
price is higher than the purchase price, there is a profit.
Conversely, if the selling price is lower than the purchase
price, there is a loss.

Profit And Loss Statement (P &
L): A summary of a corporation's revenues, costs,
and expenses within an accounting period--also called an "Income
Statement".

Profit Sharing Retirement Plan:
A plan that is established so that a corporation's employee
may share in the company's profits. When there are profits,
the corporation makes an annual contribution for each of its
employees. The funds within the plan are tax deferred until
withdrawn by the employee upon retirement or leaving the firm.
Profit sharing plans are considered institutional investors.

Profit Taking: Selling securities
that have appreciated in value since purchase, to realize
the profit. In a rising market, profit taking temporarily
pushes down prices.

Program Trading: Use of a
computer-driven program by arbitrageurs and institutional
traders for buying and selling baskets of 15 or more stocks.
The program monitors various markets and securities and gives
buy and sell signals when opportunities for profits arise
or when market conditions warrant the accumulation or liquidation
of a position.

Proprietorship: An unincorporated
business owned by one person who is entitled to all the profits
(or losses) generated from the business and is responsible
for its taxes and other liabilities.

Prospectus: A printed document
that summarizes a corporation's registration statement for
a new issue of non-exempt securities that was filed with the
SEC. It details material information about the corporation
and the security being issued. A prospectus must be given
to all buyers and potential buyers of the new issue. A preliminary
prospectus is given to investors when brokers obtain indications
of interest. Although the document does not have all the information
included in the offering circular, it does include the major
facts. A preliminary prospectus is often called a "red
herring" because its front-page notice is printed in
red ink. The notice states that the preliminary prospectus
is "subject to completion or amendment" and "shall
not constitute an offer to sell...".

A “Red Herring” Prospectus is
industry jargon for a preliminary prospectus issued by underwriters
or issuers to gauge interest in a prospective offering. It
receives its name from the warning, printed in red, that information
in the document is incomplete or subject to change before
the issue.

Proxy: A written authorization
by a shareholder allowing a representative to vote for or
against business proposals and directors at annual meetings.
The results of these votes are announced at the meeting.

Proxy Fight: A strategy used
by an acquiring company in its attempt to take control of
a target company. The acquirer and target solicit the target's
shareholders to obtain proxy votes. Whichever company obtains
more votes, wins--that is, if the acquirer receives the majority
of the proxy votes, it has effectively gained control of the
target without paying a premium price for the firm.

Proxy Statement: Information
given to shareholders on company matters that need to be voted
on. The statement is sent in conjunction with the proxy solicitations.

Prudent Man Rule: An investment
standard used by fiduciaries as a guide for identifying acceptable
investment vehicles. Some US states allow the fiduciary to
invest in securities that would be bought by a prudent man
of discretion and intelligence, and who looks for a reasonable
income and preservation of capital. Other states require that
the fiduciary only invest in a list of securities designated
by the state.

Public Information Office:
A department of the NYSE that answers investors inquiries
on various aspects of securities investing. Major areas of
inquiries involve locating brokerage firms that will take
small orders and explaining investing strategies.

Publicly Held: A company
whose shares are publicly available to the general public.
A publicly held company is usually regulated by the SEC.

Public Offering: An offering
of new securities to the investing public at a public offering
price that has been agreed upon by the issuer and the investment
bankers. This can only be done after the issue has been registered
with the SEC. The term is also used when referring to a secondary
distribution of securities previously issued.

Public Offering Price: The
price at which a new issue is offered to the public by underwriters.

Pump and Dump: An unlawful
practice where a small group of informed people buy a stock
before they recommend it to thousands of investors. The result
is a quick spike in stock price followed by an equally fast
downfall. The perpetrators who bought the stock early sell
off when the price peaks at a huge profit. Small companies
are more volatile and it's easier to manipulate a stock when
there's little or no information available about the company.

Pure Equity Trust: A special
type of irrevocable trust marketed by promoters. The trust
assets are obtained by an "exchange" of a certificate
of beneficial interest in return for the assets, as opposed
to traditional means, such as by gifting.

Pure Trust: A contractual
trust as opposed to a statutory trust, created under the Common
Law. A pure trust is one in which there must be a minimum
of three parties(the creator or settlor (never grantor), the
trustee and the beneficiary(and each is a separate entity.
A pure trust is claimed to be a lawful, irrevocable, separate
legal entity.

Put Bond: A bond, at the
holder's option, that can be redeemed at face value on a specific
date or dates. In return for this right, the holder receives
a lower yield than on a similar fixed-rate bond.

Put Option: A contract that
gives the holder the right to sell a specified number of shares
(usually 100) of a particular stock, stock index or dollar
face value of bonds, at a predetermined price--called the
"strike price"--on or before the option's expiration
date. For this right, the holder (buyer) pays the writer (seller)
a premium. The holder profits from the contract if the stock's
price drops. If the holder decides to exercise the option
(as opposed to selling it), the writer must buy the security.
The writer profits when the underlying security's price remains
the same, rises or drops by less than the premium received.

Put To The Seller: Term used
when the holder of a long put option exercises the position.
The put option writer (seller) is required to buy the underlying
security at the strike price. For example, if an ABC July
50 put is "put to the seller", the writer has to
buy 100 shares of ABC at $50 a share from the put holder.
The actual current market price for ABC may be less than $50
a share.